FDI and child labor in the EU: An panel data analysis

Abstract Multinational enterprises try to reduce operating costs and invest their capital in countries with low labor costs. However, although low labor cost is considered a determinant for foreign direct investment inflows, it is often associated with illegal activities, namely child labor. Motivated by the limited empirical evidence on the association between child labor and foreign direct investment inflows, the present research aims to investigate child labor in the European Union countries as a determinant of foreign direct investment inflows from 2002 to 2021 through a panel data analysis. The research contributes to the existing knowledge by extending an empirical model and providing empirical evidence for a group of developed countries. It is observed that the Foreign Direct investment inflows in the countries of the European Union are affected by socioeconomic conditions and institutional factors. Keywords: Child labor, Foreign Direct Investment, European Union, panel analysis.